Sebi opines on proposed share transfer between Welspun firms

Market regulator Sebi has opined that a proposed transfer of Welspun Enterprises shares, from two entities named Krishiraj Trading Ltd and Welspun Mercantile to Welspun Fintrade Private Ltd (WFTL) is not exempt from making an open offer for public investors.
However, any share transfer between Krishiraj Trading and Welspun Mercantile would be exempted, Sebi said in its 'informal guidance' sought on the proposed transaction.
The capital markets regulator said that disclosure as promoters in the shareholding pattern filing is a must for at least three years to get the exemption from open offer, prior to the proposed acquisition.
The target company (Welspun Enterprises) was listed only in 2014 and therefore Krishiraj Trading and Welspun Mercantile did not held the shares in the target company for a period of three years.

The observations have been made by Sebi in an 'interpretive letter' sought by Welspun Enterprises.
"...The proposed transfer of shares from Krishiraj Trading and Welspun Mercantile to WFTL would not be eligible for exemption ...Under Takeover Regulations. However, any transfer of shares between Krishiraj Trading and Welspun Infra Developers would be exempt...In terms of Takeover Regulation subject to fulfilment of pre-condition specified therein," Sebi said.

Sebi said that any transfer of shares between Welpsun Infra Developers Ltd (WIDL)and Krishiraj Trading is exempted from making open offer on the ground that WIDL being a step down subsidiary of Krishiraj Trading.
In August last year, Welspun Infra Developers acquired 3.14 per cent stake in Welspun Enterprises. During December 3-5, Krishiraj Trading bought 1.8 per cent holding of Welspun Enterprises from stock market.

Krishiraj Trading and Welspun Mercantile, the existing promoters of Welspun Enterprise intend to transfer their shareholding to WIDL and WFTL, through an inter-se promoter transfer.
If the shareholding of any entity hits 25 per cent threshold limit in a listed company, it is required to make an open offer for an additional 26 per cent shares from the public shareholders of the company.